Financial Advisers regime to be updatedCommerce and Consumer Affairs
Commerce and Consumer Affairs Minister Paul Goldsmith has announced plans for changes to the Financial Advisers Act (FAA) and the Financial Service Providers Act (FSPA).
“The changes come after a comprehensive review, which will simplify regulation, enable advisers to have sensible conversations and encourage more people to seek high quality advice tailored to their needs.
“A lot has happened since these Acts were originally passed including the introduction of the Financial Markets Conduct Act. The time was right to reconsider the regime to ensure it meets the needs of both consumers and industry.
“Financial advisers are often the main interface between consumers and financial markets,” says Mr Goldsmith.
Key changes to the regime include:
- Creating an even playing field for the provision of advice by requiring all advisers to put the interests of the consumer first and meet competency requirements.
- Encouraging innovation and enabling the provision of online ‘robo’ advice.
- Ensuring consumers can access good advice to questions such as ‘what KiwiSaver fund is right for me?’
- Improvements to transparency by introducing simple disclosure requirements and useful terminology.
- The need for businesses to demonstrate a strong connection to New Zealand in order to be registered under the FSPA. This will maintain integrity in New Zealand’s financial markets.
“All providers of financial advice are now required to be more transparent about limitations on their advice and disclose information regarding conflicts of interest, such as commissions.
“Focusing on consumer interest and improved transparency will improve confidence in the regulation of the financial advice industry,” says Mr Goldsmith.
The new regime will be refined further through an exposure draft of the proposed legislation. The bill is expected to be introduced to Parliament this year.
The Ministry of Business, Innovation and Employment (MBIE) will report to Cabinet on a small number of other matters including membership and proceedings of the Code Committee, compliance and enforcement tools, and arrangements for transitioning to the new regime.
“I recognise that changes will have an impact on existing financial advisers. MBIE will work with advisers on possible transitional arrangements, to ensure they are reasonable in light of practicalities such as the need to meet higher competency standards.
“I am confident these changes will ensure New Zealanders can access quality financial advice to help them plan and prepare for their savings and investment goals,” says Mr Goldsmith.
More detail on the changes can be found here.